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2023 Q2 Pulse of Lighting Survey Reveals Slower Spring

By David Gordon, founder of Electrical Trends

USLT sister publication Electrical Trends’ 2023 Q2 Pulse of Lighting survey revealed a slowing lighting market for most, and it appears that many feel Q3 will slow further for most. But the good news is that, overall, the market is still growing.

Highlights from Distributors

• According to distributors, low single-digit growth that did not meet expectations from that were shared in the Q1 Pulse of Lighting report.

• There are still growth opportunities in the market, however, as indicated by almost 50% of distributors increasing sales by more than 5%. These opportunities are typically in specific regions and/or targeting specific market segments.

• Distributor performance significantly outpaced manufacturer performance, highlighting the difference between booking and billing.

• A significant percentage of distributors are “working through their backlog.”

• And that backlog is growing for a small percentage of distributors; no distributors reported an increase in their inventory. In fact, “destocking” seems to be the story of the quarter for over 50% of respondents.

• Q3’s outlook is for even slower growth, and respondents shared that their customers see a slowing, or have concerns, looking further out.

• While pricing, for the most part, remained stable, some shared that they have been able to negotiate for projects and on conversions (or stock commitments).

The Pulse From Manufacturers

• Most reported flat or declining sales.

• Backlogs remained steady.

• Q3 expectations are minimal and, seemingly, any growth will come from backlogs being fulfilled.

• Also heard that there is much rebidding, submittal/approval processes are taking longer, and manufacturers commented on the rash of distributors returning material and/or lengthening their order cycle and “normalizing/rightsizing” their inventory.

The Lighting Market According to Reps

• Their sales performance came in between distributors and manufacturers and spanned from down significantly to up significantly — so there are winners and losers, which can relate to project wins and losses.

• They don’t see a favorable Q3 either.

• They commented on distributors consolidating lines (and inventory) as well as increasing price competitiveness in the marketplace as manufacturers jockey for opportunities.

Other Insights

• Inventories, for the vast majority, have stabilized.

• Nationally, quotation activity is slowing.

• A significant percentage of lighting influencers (specifiers) have concern looking over the next six months.

• But there are growth segments, and some are capitalizing on the IRA and IIJA (as highlighted in this article from Kenall on US Lighting Trends.)

Linda Longo, the executive editor for US Lighting Trends, a joint endeavor by Channel Marketing Group and Kerrwil Publications, recently attended Lightovation where she asked attendees about the residential market. While you may think the resi market is “dead,” it’s alive in some areas! Feedback Linda received was that “the health of the moderately affordable single-family home market depends on where you do business. California – from top to bottom – appears to be stagnant (or worse), and those states where factories are being built to meet opportunities in EV battery production are seeing a demand for multi-family housing to accommodate the influx of workers.”

And early indications for the lighting market for 2024 – flat to down 5% – with much depending on rates, credit, government stimulus (when projects are funded), and election jitters.

The good news, the lighting market, overall, experienced growth and there are opportunities in every market. The bad news? The “go go” markets of the past few years are gone.

If you’d like the details, click here to order the 2023 Q2 Pulse of Lighting report for only $35.

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